What is a Card Machine?
Card machines allow businesses to accept payments from debit and credit cards with just a quick swipe, tap, or insert. These machines, a staple at checkout counters everywhere, make transactions smoother and faster for customers and businesses. They are also known as card terminals or PDQ machines.
Why does your business need a card machine?
Card machines make it easier for your business to process payments and make it convenient for your customers to buy goods and services from you. According to UK Finance, contactless and card payments were the most used payment options in 2023.
Card machines also help your business increase sales by reaching a broader customer base and streamlining business operations.
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Balancing the Benefits and Costs of Card Machines
Card machines come with plenty of benefits, as we have mentioned before. But it’s also important to know what these benefits might cost you. Getting a card machine can be a big decision for your business, so understanding the costs ahead of time can help you choose wisely. Next, we’ll go over the main expenses you should consider when thinking about getting a card machine.
Breakdown of Card Machine Costs
When looking at the costs of card machines, start by understanding the expenses that come with the machine and the provider itself. This covers both the initial costs and the ongoing fees for using the machine.
1. Card machine costs
These are the costs specifically associated with purchasing or renting a card machine and using it for transactions.
- Terminal costs:
This is the cost of either buying or renting the card machine. Depending on your choice, you’ll either pay a one-time purchase fee or an ongoing rental fee. - Set-up fees:
A one-time fee, typically between £50 and £100, for setting up the card machine system. - Shipping costs:
Fees for delivering the card machine to your location.
2. Transaction fees
A percentage fee is charged for each transaction, generally between 1% and 3%. Transactions with premium cards like American Express may have higher costs.
3. Cancellation fee
This fee is applied if you terminate your contract early, which can vary based on your provider’s terms.
4. Monthly charges
Some providers require a minimum monthly fee called a Monthly Minimum Service Charge (usually between £10 and £20). You’ll pay the difference if your transactions don’t meet this minimum. This ensures the service provider covers its costs, even if a business’s card transactions are low.
| Cost Category | Cost Range |
|---|---|
|
Terminal Costs |
Varies (one-time or monthly) |
|
Set-Up Fees |
£50 - £100 |
|
Shipping Costs |
Varies
|
|
Transaction Costs |
1%-3% |
|
Monthly Minimum Service Charge |
£10 - £20 |
|
Cancellation Fee |
Varies with the provider |
Understanding Merchant Account Costs
Once you’ve understood the costs associated with the card machine itself, it’s also important to understand the additional costs related to the merchant account. This account is necessary for processing card payments and includes several ongoing fees.
1. Basic Merchant Account Fees
- Merchant account costs:
These are essential fees for maintaining a bank account that allows you to process card transactions. - Merchant service charge:
A small fee, usually between 0.2% and 0.3%, is charged by banks for each credit card transaction processed.
2. Compliance and Security Fees
A monthly or annual fee, typically around £5, is charged for meeting Payment Card Industry Data Security Standards. Some providers may cover this fee.
3. Transaction-Related Fees
- Refund fees:
Fees incurred when processing refunds to customers. - Foreign transaction fees:
Additional charges for transactions involving foreign cards like American Express or currency conversion. - Chargeback fees:
Costs associated with handling disputes if a customer wants to reverse a payment.
| Cost Category | Typical Cost Range |
|---|---|
|
Merchant Account Costs |
Varies |
|
Merchant Service Charge |
0.2%–0.3% |
|
PCI Compliance Fee |
£5 per month (sometimes covered) |
|
Refund Fees |
Varies |
|
Foreign Transaction Fees |
Varies |
|
Chargeback Fees |
Varies |
How Much Does a Card Machine Cost?
The cost of a card machine depends on the provider you choose. You also need to consider other factors like the type of card machine, what additional services the provider offers, how many terminals you need, and whether you buy or rent it.
| Purchase Option | Cost Range | Costs |
|---|---|---|
|
Buy Outright |
£19 - £230 + VAT |
One-off upfront fee
|
|
Rent |
£10 - £30/month |
Regular monthly costs |
Note: Additional card processing fees apply to both purchasing options, which are detailed further below.
How much does it cost to buy a card machine?
The cost of buying a card machine can vary based on the type of machine you choose.
- One option is to purchase mobile card readers from various providers. These are often the most affordable and are ideal for small businesses.
- Another option is to buy wireless card readers or machines, which offer greater convenience but typically come with a higher price tag.
- Traditional card machines, which are more expensive, are often rented rather than purchased outright. Renting can be a cost-effective solution if you need a high-end machine but want to avoid the large initial expense.
How much does it cost to rent a card machine?
In the UK, renting a card machine usually involves signing a contract with a provider. This contract can range from 6 months to five years. Many providers offer lower rental rates if you agree to a longer contract.
However, we suggest that to pay more attention to the transaction fees than just the rental cost. For businesses with a high volume of transactions, these fees can quickly add up and become a huge expense over time. So, while a lower rental cost might seem like a better option, higher transaction fees could end up costing you more in the long run.
Buying vs. Renting Card Machines
Businesses in the UK rent card machines often. But you may purchase card machines outright depending on your business needs. Here are the pros and cons of buying or renting your card machine.
| Options | Pros | Cons |
|---|---|---|
|
Buying |
One-off payment, avoiding monthly expenses. |
Maintenance and repair costs post-warranty are high. Risk of technology becoming outdated. |
|
Renting |
Low upfront cost. Includes repair/replacement, technical support, and upgrade options. |
Long-term contracts can be restrictive and more expensive over time compared to buying outright. |
Card machine price: Mobile vs. portable vs. countertop
Depending on your business’s unique needs, you might want to consider different types of card machines: mobile, portable, and countertop. Each comes with its own set of features, benefits, and, importantly, cost implications.
| Card Machine Type | Cost | Features | Benefits |
|---|---|---|---|
|
Countertop card machine |
£15-£20 |
Fixed location connectivity, High-security |
Ideal for retail with a single payment point |
|
Wireless/Portable card machine |
£20– £30 |
WiFi/Bluetooth connectivity, Portable |
Flexible for tableside or outdoor payments |
|
Mobile Card Machine |
£30 – £65 |
Uses mobile connection, Compact design |
Perfect for on-the-go transactions |
How to Select A Card Machine For My Business?
- Understanding your business needs
When choosing a card machine, it’s crucial to think about what your business needs. Different types of card machines cater to different roles; sometimes, mixing and matching can be the best way.
- Examples of card machine usage
Take a restaurant, for example. They might have a countertop card machine at the register for quick checkouts but also use mobile card machines for tableside payments.
- Buying vs. renting: what’s right for you?
Deciding whether to buy or rent these machines depends a lot on your business’s size and type.
- Pros and cons of renting
Large retail stores rent their card machines to keep up with the latest technology. Renting can be handy for seasonal businesses too, as it allows for scaling up or down without huge commitments.
- Pros and cons of buying
Mobile businesses, like food trucks, tend to move around a lot, making a portable card reader a smart purchase. Buying the equipment outright means getting rid of regular rental fees and can be more cost-effective over a long time.
- Making the right choice for your business
Each choice has its upsides and downsides. What works best really depends on the nature of your business and how you manage your finances.
- Evaluating your options
Consider how each option aligns with your day-to-day operations, customer service approach, and financial goals to make the best decision for your business’s future.
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FAQs
The decision to rent or buy a credit card machine depends on your business’s specific needs and circumstances. Renting may be the best option if you’re looking for lower upfront costs and flexibility to upgrade to the latest technology without additional investment. Whereas, buying a credit card machine might suit you if you prefer owning the equipment outright, avoiding ongoing monthly rental fees, and planning to use the machine for a long time.
Merchant account fees, transaction costs (1% to 3%), monthly minimum service charges, PCI compliance fees, and other related fees. Read the blog in detail to learn in detail.
Setup times in the UK can vary depending on the provider you choose. Typically, you can use your device after a few days or a week once the device is delivered.
